Correlation Between John Hancock and Prudential Qma

Can any of the company-specific risk be diversified away by investing in both John Hancock and Prudential Qma at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining John Hancock and Prudential Qma into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between John Hancock Financial and Prudential Qma Intl, you can compare the effects of market volatilities on John Hancock and Prudential Qma and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in John Hancock with a short position of Prudential Qma. Check out your portfolio center. Please also check ongoing floating volatility patterns of John Hancock and Prudential Qma.

Diversification Opportunities for John Hancock and Prudential Qma

-0.59

Correlation Coefficient

John Hancock  Prudential Qma

Excellent diversification

The 3 months correlation between John and Prudential is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding John Hancock Financial and Prudential Qma Intl in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Qma Intl and John Hancock is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on John Hancock Financial are associated (or correlated) with Prudential Qma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Qma Intl has no effect on the direction of John Hancock i.e., John Hancock and Prudential Qma go up and down completely randomly.

Pair Corralation between John Hancock and Prudential Qma

Considering the 90-day investment horizon John Hancock Financial is expected to generate 1.97 times more return on investment than Prudential Qma. However, John Hancock is 1.97 times more volatile than Prudential Qma Intl. It trades about 0.21 of its potential returns per unit of risk. Prudential Qma Intl is currently generating about -0.01 per unit of risk. If you would invest  3,208  in John Hancock Financial on September 13, 2024 and sell it today you would earn a total of  647.00  from holding John Hancock Financial or generate 20.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

John Hancock Financial  vs.  Prudential Qma Intl

John Hancock Financial

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in John Hancock Financial are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of very conflicting basic indicators, John Hancock displayed solid returns over the last few months and may actually be approaching a breakup point.

Prudential Qma Intl

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Prudential Qma Intl has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Prudential Qma is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with John Hancock and Prudential Qma

The main advantage of trading using opposite John Hancock and Prudential Qma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if John Hancock position performs unexpectedly, Prudential Qma can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Prudential Qma will offset losses from the drop in Prudential Qma's long position.

The idea behind John Hancock Financial and Prudential Qma Intl pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.